It's been a stressful few weeks for US auto makers. Last week, they handed in their proposals to be reviewed by Congress. I'm not sure about the details, but it was along the lines of major cut backs, and the Ford CEO vowing to work for $1 a year if Ford had to take money from the government (they are currently only asking for a loan line for emergency). At the beginning of the week, the senate approved a bailout. On Thursday, it was blocked by opposing Republicans, who thinks that it will be better for the big 3 to pursue a prearranged bankruptcy instead and also because the Unions wouldn't back down from a wage cut (beggars really can't be choosers...). Supporters argue that no one wants to buy cars from a bankrupt car company, which is a very valid point (think of the warranty/repair issues!). On Friday, Bush had to step in vowing to save the automakers from collapsing, with the TARP money (which they originally didn't want to do). A lot is at stake. The automakers claim that 1 out of 10 jobs in the US is connected to the auto industry. That would be devastating to the already weak economy.

A very good example of this trickling effect, would be GMAC the auto financier, which just got approved to become a bank holding company last week. Unfortunately, becoming a bank holding company is not as easy as GS and MS makes it out to be and they're struggling to raise the capital needed to do so. They are trying to renegotiate with debt holders to swap the debt for a smaller amount of debt, cash and preferred shares. If this doesn't work then they are highly likely to go into bankruptcy.

The other big news this week was Bernie Madoff $50 billion fraud. This former chairman of the NASDAQ stock market and Wall Street legend, is allegedly the perpetrator of a $50 billion giant ponzi scheme. According to Wiki, a ponzie scheme is a fraudalent investment operation that pays abnormally high returns to investors using the money coming in from subsequent investors. Apparently lots of the super wealthy have been fooled by this scheme. It is amazing how much you can get away with, with a good reputation and an affable character!

It appears though that the markets is already immune to these scandals, because the markets ended (by a tiny bit) up this week!